Blueprint for Option Buyers

Leverage is helps efficient use of trading capital, and is valued by professional traders precisely because it allows them to trade larger positions (i.e. more contracts, or shares, etc.) with less trading capital.

Leverage does not alter the potential profit or loss that a trade can make. And so is quite risky and in a couple of minutes you can see a big loss .

When the market is crashing or in turmoil, the leverage becomes a deadly weapon in the hands of the broker to wipe out your account by suddenly jacking up margin levels.

Under no circumstance you should be using any leverage and deposit in your margin account full value of contract. If you are trading 0.10 contract then you should keep in your account $10,000 and not less if you want your account to be saved from being savaged by volatility.

Successful traders focus on the following in this order:

1. Selection of candidate - acquire a study tool that gives you statistics/information about total trades done in recent past and the frequencies of quick trades

2. Risk management :You determine your capacity to take risk and use the capital efficiently. Assess total risk in terms of pips and calculate the capital required. If you have acquired trading skills by practising on a paper trading account or by playing a video game, it is worth trying using Margin Stop-out level as STOP LOSS.

3. Market trend or Direction : Not needed for Momentum trading. Market is always in the Up or Down mode.

4. Momentum Trading: Using Margin stop-out level as Stop Loss is good risk management technique after assessing how volatile the market is are going to be. When the market is in turmoil, it will wipe out margin stop out level in a few seconds.

5. Timing and Duration of Trade: Selection of trading schedule and duration of trade is critical. Big hits need room to play and limited trading capital won't be helpful.

6. Selection of Broker: 100% of CFD brokers are market makers. If you trade for 5 minutes before the Trading break CFD market makers will increase ask and bid in such a way that traders with limited margin and big exposure will be wiped out. If you want to trade stop-out level based trading, then it is MUST you study tactics adopted by CFD brokers to kill small capital investors. CFDs move parallel with Futures can't be placed in this category. You have to understand how brokers maintain different sets of books and for whom.

7. Precise Entry: You should be able to detect birth of momentum. You should be a skillful trader..

8. Exit:: You have already marked Stop Out Level as your Exit point for the trade. You have not left any space for Hopeful Trading.You can't afford to think in terms of exiting in such a situation. "Do or Die" situation demands you deploy your skills of detecting momentum with precision.